If you are new to the area of loans, you may be wondering: What are FHA loans? Well, according to Wikiapedia.org, an FHA loan is “… a federal assistance mortgage loan in the United States insured by the Federal Housing Administration.”

Historically, FHA loans were issued to Americans with lower incomes who wished to purchase a home they could not otherwise afford. Today, FHA loans typically serve low- to moderate-income families, who cannot afford a conventional down payment on a house and do not qualify for private mortgage insurance (PMI), by lowering some of the costs of their mortgage loans.

The first step in attaining an FHA loan is to contact a private lender about FHA refinancing. During your appointment, the potential lender will assess you for risk. He or she will analyze your debt to income ratio and let you know what kind of home you will be able to afford in your area. Then, based on your monthly income, expenses, debts and other various factors, the lender will decide your eligibility and terms for the loan.

Each lender sets its own terms and rates, so take the time to comparison shop. Finding the best mortgage rates can be a time-consuming project, but the end result will be worth it